“We continue to see favorable demand trends in all of our business units. Uniti Fiber recently signed a contract with a major wireless customer to deploy 800 combined macro backhaul and small cell sites across its Southeast fiber footprint, adding $500,000 of monthly recurring revenue once all sites are delivered over the next three years. This agreement demonstrates the continued need for wireless carriers to densify their networks as they move towards a broader rollout of 5G wireless services,” commented Kenny Gunderman, President and Chief Executive Officer.

Mr. Gunderman continued, “We continue to evaluate several opportunities that will optimize our portfolio of premier infrastructure assets, including recycling capital and discontinuing certain non-core products and services. We are focused on driving high margin, low churn recurring revenues at all of our business units. We believe these initiatives will achieve greater revenue diversification and improve the overall quality of our customer base over time. Regarding mediation proceedings with Windstream, negotiations with Windstream and certain of its creditors are ongoing.”

QUARTERLY RESULTS

Consolidated revenues for the third quarter of 2019 were $263.6 million. Net loss and Adjusted EBITDA were $19.8 million and $202.7 million, respectively, for the same period. Net loss attributable to common shares was $19.5 million for the period and included $15.2 million of transaction related and other costs. Adjusted Funds From Operations (“AFFO”) attributable to common shareholders was $98.7 million, or $0.47 per diluted common share.

Uniti Fiber contributed $78.0 million of revenues and $30.5 million of Adjusted EBITDA for the third quarter of 2019, achieving Adjusted EBITDA margins of approximately 39%. Uniti Fiber’s net success-based capital expenditures during the quarter were $39.4 million, and maintenance capital expenditures were $1.5 million. At September 30, 2019, Uniti Fiber had approximately $1.2 billion of revenues under contract.

Uniti Towers contributed $3.3 million of revenues and reported near break-even Adjusted EBITDA for the quarter. Uniti Towers’ total capital expenditures for the third quarter were $20.9 million and included the completed construction of 55 towers.

Uniti Leasing had revenues of $179.6 million and Adjusted EBITDA of $178.1 million for the third quarter.

The Consumer CLEC business had revenues of $2.7 million for the third quarter, achieving Adjusted EBITDA margins of approximately 17%.

INVESTMENT TRANSACTIONS

During the quarter, the Company closed on its sale-leaseback and fiber acquisition with Bluebird Network, LLC (“Bluebird”) through an OpCo/PropCo partnership with Macquarie Infrastructure Partners (“MIP”). Uniti acquired approximately 178,000 fiber strand miles in the Midwest across Missouri, Kansas, Illinois, and Oklahoma. In addition, the Company completed the sale of its Uniti Fiber Midwest operations to MIP, while Uniti retained the ownership of its existing Midwest fiber network. The Company is leasing the Bluebird fiber network and its Midwest fiber network, on a combined basis, to MIP under a long-term triple net lease, and is included within the results of Uniti Leasing. The results of our Midwest operations have been excluded from the results of Uniti Fiber, subsequent to closing on August 30, 2019.

LIQUIDITY AND FINANCING TRANSACTIONS

At quarter-end, the Company had approximately $198 million of unrestricted cash and cash equivalents, and undrawn borrowing availability under its revolving credit agreement. The Company’s leverage ratio at quarter end was 6.3x based on Net Debt to Annualized Adjusted EBITDA.

On November 5, 2019, the Company’s Board of Directors declared a quarterly cash dividend of $0.22 per common share, payable on January 15, 2020 to stockholders of record on December 31, 2019.

UPDATED FULL YEAR 2019 OUTLOOK

The Company’s updated 2019 outlook includes, among other things, (i) the impact of closing the Bluebird transaction earlier than previously anticipated, (ii) transaction related costs and other items reported year-to-date, and (iii) other business unit level revisions, including discontinued products and services. Our 2019 outlook assumes the Windstream lease continues in full force and effect, and that Windstream continues to make all lease payments on time.

Our current outlook excludes any future acquisitions, capital market transactions, and future transaction related and other costs not mentioned herein. Furthermore, our outlook is subject to adjustment based on the finalization of purchase price allocations related to acquisitions and other factors. Actual results could differ materially from these forward-looking statements.

The Company’s consolidated outlook for 2019 is as follows (in millions):

Full Year 2019

Revenue

$

1,059

to

$

1,069

Net income attributable to common shareholders

24

to

33

Adjusted EBITDA (1)

812

to

821

Interest expense, net (2)

390

to

390

Attributable to common shareholders:

FFO (1)

314

to

323

AFFO (1)

411

to

420

Weighted-average common shares outstanding – diluted

202

to

202

________________________

(1)

See “Non-GAAP Financial Measures” below.

(2)

Includes capitalized interest and amortization of deferred financing costs and debt discounts.

CONFERENCE CALL

Uniti will hold a conference call today to discuss this earnings release at 4:15 PM Eastern Time (3:15 PM Central Time). The dial-in number for the conference call is (844) 513-7153 (or (508) 637-5603 for international callers) and the conference ID is 8190236. The conference call will be webcast live and can be accessed on the Company’s website at www.uniti.com. A replay of the call will be available on the Company’s website or by telephone beginning on November 7, 2019 at approximately 8:00 PM Eastern Time. To access the telephone replay, which will be available for 14 days, please dial (855) 859-2056 and enter the conference ID number 8190236.

ABOUT UNITI

Uniti, an internally managed real estate investment trust, is engaged in the acquisition and construction of mission critical communications infrastructure, and is a leading provider of wireless infrastructure solutions for the communications industry. As of September 30, 2019, Uniti owns 6.0 million fiber strand miles, approximately 630 wireless towers, and other communications real estate throughout the United States. Additional information about Uniti can be found on its website at www.uniti.com.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release and today’s conference call may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended from time to time. Those forward-looking statements include all statements that are not historical statements of fact, including, without limitation, our 2019 financial outlook, our business strategies, growth prospects, industry trends, sales opportunities, and operating and financial performance.

Words such as "anticipate(s)," "expect(s)," "intend(s)," “estimate(s),” “foresee(s),” "plan(s)," "believe(s)," "may," "will," "would," "could," "should," "seek(s)" and similar expressions, or the negative of these terms, are intended to identify such forward-looking statements. These statements are based on management's current expectations and beliefs and are subject to a number of risks and uncertainties that could lead to actual results differing materially from those projected, forecasted or expected. Although we believe that the assumptions underlying the forward-looking statements are reasonable, we can give no assurance that our expectations will be attained. Factors which could materially alter our expectations include, but are not limited to, the future prospects of our largest customer, Windstream Holdings, which filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code; our ability to continue as a going concern if Windstream Holdings were to successfully reject the master lease, recharacterize the master lease or be unable or unwilling to perform its obligations under the master lease, including its obligations to make monthly rent payments; the ability and willingness of our customers to meet and/or perform their obligations under any contractual arrangements entered into with us, including master lease arrangements; the ability of our customers to comply with laws, rules and regulations in the operation of the assets we lease to them; the ability and willingness of our customers to renew their leases with us upon their expiration, and the ability to reposition our properties on the same or better terms in the event of nonrenewal or in the event we replace an existing tenant; the adverse impact of litigation affecting us or our customers; our ability to renew, extend or obtain contracts with significant customers (including customers of the businesses we acquire); the availability of and our ability to identify suitable acquisition opportunities and our ability to acquire and lease the respective properties on favorable terms; the risk that we fail to fully realize the potential benefits of acquisitions or have difficulty integrating acquired companies; our ability to generate sufficient cash flows to service our outstanding indebtedness; our ability to access debt and equity capital markets; the impact on our business or the business of our customers as a result of credit rating downgrades and fluctuating interest rates; our ability to retain our key management personnel; our ability to qualify or maintain our status as a real estate investment trust (“REIT”); changes in the U.S. tax law and other state, federal or local laws, whether or not specific to REITs; covenants in our debt agreements that may limit our operational flexibility; other risks inherent in the communications industry and in the ownership of communications distribution systems, including potential liability relating to environmental matters and illiquidity of real estate investments; the risk that the agreements relating to our pending transactions may be modified or terminated prior to closing; the risks related to satisfying the conditions to our pending transactions; and additional factors described in our reports filed with the SEC.

Uniti expressly disclaims any obligation to release publicly any updates or revisions to any of the forward-looking statements set forth in this press release and today’s conference call to reflect any change in its expectations or any change in events, conditions or circumstances on which any statement is based.

NON-GAAP PRESENTATION

This release and today’s conference call contain certain supplemental measures of performance that are not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”). Such measures should not be considered as alternatives to GAAP. Further information with respect to and reconciliations of such measures to the nearest GAAP measure can be found herein.

Uniti Group Inc.Reconciliation of Net Income to FFO and AFFO (In thousands, except per share data)

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Net (loss) income attributable to common shareholders

$

(19,470

)

$

2,075

$

19,789

$

(4,357

)

Real estate depreciation and amortization

81,084

93,295

247,246

284,271

Gain on sale of real estate assets, net of tax

(205

)

-

(24,420

)

-

Participating securities’ share in earnings

50

655

301

1,992

Participating securities’ share in FFO

(306

)

(655

)

(875

)

(1,992

)

Adjustments for noncontrolling interests

(1,472

)

(2,152

)

(4,506

)

(6,556

)

FFO attributable to common shareholders

59,681

93,218

237,535

273,358

Transaction related and other costs

15,179

2,323

28,883

12,025

Change in fair value of contingent consideration

(2,999

)

(199

)

(28,530

)

(687

)

Amortization of deferred financing costs and debt discount

12,386

6,193

30,045

18,340

Stock based compensation

2,845

1,963

7,930

6,058

Non-real estate depreciation and amortization

20,082

19,453

60,325

58,040

Straight-line revenues

(34

)

(3,532

)

(1,450

)

(10,932

)

Maintenance capital expenditures

(1,539

)

(1,015

)

(6,265

)

(3,165

)

Amortization of discount on convertible preferred stock

-

745

993

2,235

Cash taxes on tax basis cancellation of debt

-

-

4,590

-

Other, net

(6,177

)

(8,738

)

(21,826

)

(25,998

)

Adjustments for noncontrolling interests

(708

)

(368

)

(1,443

)

(1,203

)

Adjusted FFO attributable to common shareholders

$

98,716

$

110,043

$

310,787

$

328,071

Reconciliation of Diluted FFO and AFFO:

FFO Attributable to common shareholders – Basic

$

59,681

$

93,218

$

237,535

$

273,358

Impact of if-converted dilutive securities

5,271

-

5,356

-

FFO Attributable to common shareholders – Diluted

$

64,952

$

93,218

$

242,891

$

273,358

AFFO Attributable to common shareholders – Basic

$

98,716

$

110,043

$

310,787

$

328,071

Impact of if-converted dilutive securities

3,450

-

3,565

-

AFFO Attributable to common shareholders – Diluted

$

102,166

$

110,043

$

314,352

$

328,071

Weighted average common shares used to calculate basic earnings (loss) per common share

191,940

175,396

185,746

175,101

Impact of dilutive non-participating securities

-

889

-

873

Impact of if-converted dilutive securities

27,758

-

9,659

-

Weighted average common shares used to calculate diluted FFO and AFFO per common share

219,698

176,285

195,405

175,974

Per diluted common share:

EPS

$

(0.10

)

$

0.01

$

0.11

$

(0.02

)

FFO

$

0.30

$

0.53

$

1.24

$

1.55

AFFO

$

0.47

$

0.62

$

1.61

$

1.86

Uniti Group Inc.Reconciliation of EBITDA and Adjusted EBITDA(In thousands)

Three Months Ended September 30,

Nine Months Ended September 30,

2019

2018

2019

2018

Net (loss) income

$

(19,777

)

$

4,224

$

22,262

$

1,862

Depreciation and amortization

101,166

112,748

307,571

342,311

Interest expense, net

104,655

80,406

286,842

237,398

Income tax expense (benefit)

(1,745

)

(1,466

)

10,152

(5,208

)

EBITDA

184,299

195,912

626,827

576,363

Stock based compensation

2,845

1,963

7,930

6,058

Transaction related and other costs

15,179

2,323

28,883

12,025

Gain on sale of real estate

(205

)

-

(28,995

)

-

Other (income) expense

540

(1,038

)

(24,848

)

(1,574

)

Adjusted EBITDA

$

202,658

$

199,160

$

609,797

$

592,872

Adjusted EBITDA:

Leasing

$

178,095

$

174,123

$

528,727

$

519,848

Fiber Infrastructure

30,536

28,480

97,572

87,080

Towers

(417

)

1,213

(134

)

(417

)

Consumer CLEC

465

765

1,676

2,606

Corporate

(6,021

)

(5,421

)

(18,044

)

(16,245

)

$

202,658

$

199,160

$

609,797

$

592,872

Annualized Adjusted EBITDA (1)

$

810,632

As of September 30, 2019:

Total Debt (2)

$

5,285,242

Cash and cash equivalents

197,317

Net Debt

$

5,087,925

Net Debt/Annualized Adjusted EBITDA

6.3x

________________________

(1)

Calculated as Adjusted EBITDA for the most recently reported three-month period, multiplied by four. Annualized Adjusted EBITDA has not been prepared on a pro forma basis in accordance with Article 11 of Regulation S-X.

(2)

Includes $55.2 million of finance leases but excludes $219.7 million of unamortized discounts and deferred financing costs.

Uniti Group Inc.Projected Future Results (1)(In millions)

Year Ended December 31, 2019

Net income attributable to common shareholders – Basic

$ 24 to $ 33

Noncontrolling interest share in earnings

1

Participating securities’ share in earnings

1

Dividends declared on convertible preferred stock

1

Amortization of discount on convertible preferred stock

1

Net income (2)

27 to 36

Interest expense, net

390

Depreciation and amortization

401

Income tax expense

10

EBITDA (2)

828 to 837

Stock based compensation

10

Transaction related and other costs (3)

29

Gain on sale of real estate and other, net (4)

(54)

Adjusted EBITDA (2)

$ 812 to $ 821

________________________

(1)

These ranges represent management’s best estimates based on the underlying assumptions as of the date of this press release. Final purchase price allocations, future acquisitions, capital market transactions, changes in market conditions, and other factors are excluded from our projections. There can be no assurance that our actual results will not differ materially from the estimates set forth above.

(2)

The components of projected future results may not add due to rounding.

(3)

Future transaction related and other costs are not included in our current outlook.

(4)

Represents gain on changes in fair value of contingent consideration and pre-tax gain on sale of Latin American tower portfolio and U.S ground lease business. Amount excludes income taxes related to real estate sales of approximately $5.0 million, which are included in Income tax expense in the reconciliation above.

Uniti Group Inc.Projected Future Results (1)(Per Diluted Share)

Year EndedDecember 31, 2019

Net income attributable to common shareholders – Basic

$ 0.13 to $ 0.17

Real estate depreciation and amortization

1.71

Gain on sale of real estate, net of tax (2)

(0.13)

Participating securities share in earnings

-

Participating securities share in FFO

-

Adjustments for noncontrolling interests

(0.03)

FFO attributable to common shareholders – Basic (3)

$ 1.67 to $ 1.72

Impact of if-converted securities

(0.06)

Net income attributable to common shareholders – Diluted (3)

$ 1.61 to $ 1.66

FFO attributable to common shareholders – Basic (3)

$ 1.67 to $ 1.72

Transaction related and other costs (4)

0.15

Change in fair value of contingent consideration

(0.15)

Cash taxes on tax basis cancellation of debt

0.02

Amortization of deferred financing costs and debt discount

0.23

Stock based compensation

0.05

Non-real estate depreciation and amortization

0.43

Straight-line revenues

-

Maintenance capital expenditures

(0.04)

Amortization of discount on convertible preferred stock

0.01

Other, net

(0.17)

Adjustments for noncontrolling interests

(0.01)

AFFO attributable to common shareholders – Basic (3)

$ 2.19 to $ 2.24

Impact of if-converted securities

(0.12)

AFFO attributable to common shareholders – Diluted (3)

$ 2.07 to $ 2.12

________________________

(1)

These ranges represent management’s best estimates based on the underlying assumptions as of the date of this press release. Final purchase price allocations, future acquisitions, capital market transactions, changes in market conditions, and other factors are excluded from our projections. There can be no assurance that our actual results will not differ materially from the estimates set forth above.

(2)

Represents gain on sale of Latin American tower portfolio and U.S. ground lease business, net of taxes of approximately $5.0 million.

(3)

The components of projected future results may not add to FFO and AFFO attributable to common shareholders due to rounding.

(4)

Future transaction related and other costs are not included in our current outlook.

Components of Interest Expense (1)(In millions)

Year EndedDecember 31, 2019

Interest expense on debt obligations

$352

Capitalized interest

(5)

Amortization of deferred financing cost and debt discounts

43

Interest expense, net (2)

$390

________________________

(1)

These ranges represent management’s best estimates based on the underlying assumptions as of the date of this press release. Final purchase price allocations, future acquisitions, capital market transactions, changes in market conditions, and other factors are excluded from our projections. There can be no assurance that our actual results will not differ materially from the estimates set forth above.

(2)

The components of interest expense may not add to the total due to rounding.

NON-GAAP FINANCIAL MEASURES

We refer to EBITDA, Adjusted EBITDA, Funds From Operations (“FFO”) as defined by the National Association of Real Estate Investment Trusts (“NAREIT”) and Adjusted Funds From Operations (“AFFO”) in our analysis of our results of operations, which are not required by, or presented in accordance with, accounting principles generally accepted in the United States (“GAAP”). While we believe that net income, as defined by GAAP, is the most appropriate earnings measure, we also believe that EBITDA, Adjusted EBITDA, FFO and AFFO are important non-GAAP supplemental measures of operating performance for a REIT.

We define “EBITDA” as net income, as defined by GAAP, before interest expense, provision for income taxes and depreciation and amortization. We define “Adjusted EBITDA” as EBITDA before stock-based compensation expense and the impact, which may be recurring in nature, of transaction and integration related costs, costs associated with Windstream’s bankruptcy, costs associated with litigation claims made against us, and costs associated with the implementation of our new enterprise resource planning system, collectively “Transaction Related and Other Costs”, the write off of unamortized deferred financing costs, costs incurred as a result of the early repayment of debt, gains or losses on dispositions, changes in the fair value of contingent consideration and financial instruments, and other similar or infrequent items. We believe EBITDA and Adjusted EBITDA are important supplemental measures to net income because they provide additional information to evaluate our operating performance on an unleveraged basis. In addition, Adjusted EBITDA is calculated similar to defined terms in our material debt agreements used to determine compliance with specific financial covenants. Since EBITDA and Adjusted EBITDA are not measures calculated in accordance with GAAP, they should not be considered as alternatives to net income determined in accordance with GAAP.

Because the historical cost accounting convention used for real estate assets requires the recognition of depreciation expense except on land, such accounting presentation implies that the value of real estate assets diminishes predictably over time. However, since real estate values have historically risen or fallen with market and other conditions, presentations of operating results for a REIT that use historical cost accounting for depreciation could be less informative. Thus, NAREIT created FFO as a supplemental measure of operating performance for REITs that excludes historical cost depreciation and amortization, among other items, from net income, as defined by GAAP. FFO is defined by NAREIT as net income attributable to common shareholders computed in accordance with GAAP, excluding gains or losses from real estate dispositions, plus real estate depreciation and amortization and impairment charges. We compute FFO in accordance with NAREIT’s definition.

The Company defines AFFO, as FFO excluding (i) transaction and integration costs; (ii) Windstream bankruptcy and litigation related expenses; (iii) certain non-cash revenues and expenses such as stock-based compensation expense, amortization of debt and equity discounts, amortization of deferred financing costs, depreciation and amortization of non-real estate assets, straight line revenues, non-cash income taxes, and the amortization of other non-cash revenues to the extent that cash has not been received, such as revenue associated with the amortization of tenant capital improvements; and (iv) the impact, which may be recurring in nature, of the write-off of unamortized deferred financing fees, additional costs incurred as a result of early repayment of debt, taxes associated with tax basis cancellation of debt, gains or losses on dispositions, changes in the fair value of contingent consideration and financial instruments and similar or infrequent items less maintenance capital expenditures. We believe that the use of FFO and AFFO, and their respective per share amounts, combined with the required GAAP presentations, improves the understanding of operating results of REITs among investors and analysts, and makes comparisons of operating results among such companies more meaningful. We consider FFO and AFFO to be useful measures for reviewing comparative operating performance. In particular, we believe AFFO, by excluding certain revenue and expense items, can help investors compare our operating performance between periods and to other REITs on a consistent basis without having to account for differences caused by unanticipated items and events, such as transaction and integration related costs. The Company uses FFO and AFFO, and their respective per share amounts, only as performance measures, and FFO and AFFO do not purport to be indicative of cash available to fund our future cash requirements. While FFO and AFFO are relevant and widely used measures of operating performance of REITs, they do not represent cash flows from operations or net income as defined by GAAP and should not be considered an alternative to those measures in evaluating our liquidity or operating performance.

Further, our computations of EBITDA, Adjusted EBITDA, FFO and AFFO may not be comparable to that reported by other REITs or companies that do not define FFO in accordance with the current NAREIT definition or that interpret the current NAREIT definition or define EBITDA, Adjusted EBITDA and AFFO differently than we do.